Title
Destileria Limtuaco and Co., Inc. vs. Advertising Board of the Philippines
Case
G.R. No. 164242
Decision Date
Nov 28, 2008
AdBoard, a private advertising regulator, revoked clearance for a controversial ad by petitioners, who challenged its authority. The Supreme Court dismissed the petition, ruling AdBoard’s self-regulation is voluntary and not subject to prohibition, upholding its actions as non-state, contractual, and constitutional.
clearance for commercial advertising
sanctions
forum shopping

Case Summary (G.R. No. 164242)

Factual Background

In January 2004, Destileria and Convoy, through SLG Advertising, applied to AdBoard for a clearance to air a radio advertisement titled “Ginagabi (Nakatikim ka na ba ng Kinse Anyos).” AdBoard issued the requested clearance.

After the advertisement began airing, AdBoard received complaints from the public. AdBoard asked SLG for a replacement, but SLG did not respond. As complaints continued, AdBoard asked SLG to withdraw the advertisement, but SLG did not comply. Consequently, AdBoard decided to recall the clearance it had previously issued, effective immediately. The recall decision was conveyed to SLG and to AdBoard’s member-organizations.

Petitioners protested the recall. Thereafter, petitioners filed a complaint for Dissolution of Corporation, Damages, and Application for Preliminary Injunction with prayer for a Temporary Restraining Order with the Regional Trial Court (RTC) of Makati, docketed as Civil Case No. 04-277. In the amended complaint, petitioners sought, among others, revocation or cancellation of AdBoard’s registration and its dissolution, grounding their claims on the allegation that AdBoard usurped the functions of the Department of Trade and Industry (DTI) and the Movie and Television Review and Classification Board (MTRCB). Petitioners also sought the nullity of AdBoard’s “Code of Ethics for Advertising” and “ACRC Manual of Procedures for Screening and Filing of Complaints and Appeals” (ACRC Manual).

Separately, on May 20, 2004, AdBoard issued ACRC Circular No. 2004-02, reminding its members-organizations of Article VIII of the ACRC Manual, which prohibited the airing of materials not duly screened by AdBoard. Petitioners then filed with the Ombudsman a complaint for misconduct and conduct prejudicial to the best interest of the service against AdBoard’s officers.

Petitioners’ Rule 65 Petition and Arguments

On July 16, 2004, petitioners filed the present petition under Rule 65 for writ of prohibition and preliminary injunction. Petitioners framed the controversy around their asserted right to advertise as constitutionally protected and allegedly a form of property right. They argued that requiring AdBoard clearance before advertisements could be aired amounted to deprivation of property without due process of law. They further contended that AdBoard’s regulation was an exercise of police power, and thus had to conform to constitutional limits.

Petitioners also relied on the theory that AdBoard misrepresented that it had the power to screen, review, and approve all radio and television advertisements.

AdBoard’s Responses: Procedural Defects and Substantive Position

AdBoard moved for dismissal on procedural grounds. It argued that petitioners failed to observe the hierarchy of courts and failed to comply with certain requirements for filing the petition, including the submission of the statement of material dates, the attachment of a certified true copy of ACRC Circular No. 2004-02, and the defect in the certification of non-forum shopping.

On the merits, AdBoard asserted that it derived its authority from the voluntary submission of its members to its jurisdiction. It argued that there was no law prohibiting it from engaging in self-regulatory functions and from issuing clearances before advertising.

Issues Raised for Resolution

The controversy required the Court to determine whether a writ of prohibition was proper to command AdBoard to desist from requiring clearance and from imposing sanctions connected to broadcasting or publishing advertisements without such clearance. The Court also had to address petitioners’ use of Rule 65 despite the existence of a previously filed case before the RTC involving substantially the same parties, issues, and requested relief. Corollary to these questions were petitioners’ alleged attempts to circumvent procedural barriers through a second proceeding.

Legal Framework: When Prohibition Lies Under Rule 65

The Court examined the requisites under Section 2, Rule 65 for entitlement to a petition for prohibition. It required that the petition be directed against a tribunal, corporation, board or person exercising judicial, quasi-judicial, or ministerial functions; that the challenged action be taken without or in excess of jurisdiction or with grave abuse of discretion; and that there be no appeal or other plain, speedy, and adequate remedy in the ordinary course of law.

The Court also described the nature of the functions covered by prohibition. A judicial function exists where an actor determines what the law is, declares the legal rights of parties, and adjudicates upon those rights. A quasi-judicial function applies to administrative bodies or officers required to investigate facts, ascertain factual existence, hold hearings, draw conclusions as a basis for official action, and exercise discretion of a judicial nature. A ministerial function involves performance of an act in a prescribed manner under given facts, without regard for the propriety of the act through the actor’s discretion.

The Court’s Ruling on the Nature of AdBoard’s Challenged Acts

The Court held that the acts sought to be prohibited were not acts of a tribunal, board, officer, or person exercising judicial, quasi-judicial, or ministerial functions. What was in contest was AdBoard’s power and authority as a private organization—composed of several member-organizations—that derived its authority from its own members. The Court reasoned that the definition and purpose of a writ of prohibition excludes its use against persons or groups acting in a purely private capacity. Accordingly, the Court concluded that prohibition would not lie.

The Court further noted that the filing of the present petition was, in substance, a continuation of petitioners’ effort to challenge AdBoard’s authority in another forum after having already initiated a case in the RTC.

Forum Shopping and the Dismissal

The Court observed that petitioners already filed Civil Case No. 04-277 before the RTC, where they sought revocation or cancellation of AdBoard’s registration, dissolution of AdBoard, and the nullity of AdBoard’s Code of Ethics for Advertising and ACRC Manual. Although the present action was styled as a petition for prohibition, the Court found it to be an attempt to have AdBoard’s authority challenged in yet another forum.

The Court reiterated the doctrine of forum shopping, describing it as the institution of two or more proceedings grounded on the same cause on the supposition that one or another forum would yield a favorable disposition. It emphasized that the test was whether the two or more cases had identity of parties, identity of rights or causes of action, and identity of reliefs sought, such that any judgment rendered in one case would amount to res judicata in the other.

Applying the test, the Court held that there was identity between Civil Case No. 04-277 and the present petition. Both involved the same parties, with Destileria and Convoy as plaintiffs in the present petition and also as plaintiffs in Civil Case No. 04-277; and AdBoard as defendant in both cases, with the additional defendant of Oscar T. Valenzuela, AdBoard’s Executive Director, in Civil Case No. 04-277. The Court also found that the cases raised practically the same basic causes of action and sought substantially the same relief.

The Court explained that identity of causes of action existed because the facts and evidence essential to resolution of the issue were the same. Both case

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